Scotiabank takes $168 million hit as it shuts historic gold unit
Bank of Nova Scotia has set aside C$232 million ($168 million) to cover the cost of winding down its historic precious-metals unit as well as a potential settlement of U.S. investigations into the unit’s trading activities.
The charges this year, which the bank disclosed in its quarterly earnings report on Tuesday, mark an ignominious end to what was once one of the world’s top gold-trading businesses, with a history dating back to the 17th century.
Scotiabank announced it was closing down its metals business last month. The bank had already significantly reduced its activity in bullion markets, where it was once a leading player alongside banks such as JPMorgan Chase & Co. and HSBC Holdings Plc. Last year it dropped the “Mocatta” name, a fixture of the gold market ever since Moses Mocatta opened an account to trade precious metals in 1671.
The bank has been caught up in regulatory scrutiny of banks’ precious-metals trading and one of its former traders last year pleaded guilty to trying to manipulate prices through spoofing.
Scotiabank, which had previously disclosed that it was being investigated, on Tuesday said it was “engaging in settlement discussions with the applicable authorities” in relation to probes from the Commodity Futures Trading Commission and the U.S. Department of Justice into its activities in the metals markets.
The C$232 million that Scotiabank set aside in the fiscal year to date was related to both the investigations and the “costs related to the wind-down of the metals business,” the bank said.
(By Jack Farchy, with assistance from Doug Alexander)